DEFINITION of 'Hearsay'

Hearsay is testimony given during a trial that is not based on what the witness has directly seen, but instead on what the witness was told by others. Hearsay evidence is a weak source of evidence, and is often prohibited in court.

BREAKING DOWN 'Hearsay'

During a trial, the plaintiff (or prosecution) and defendant present evidence that they believe provide credence to their side of the case or discredit the other side. They may also have witnesses testify in court about what they know about certain aspects of the case, such as the nature of a business arrangement or the timeline of events.

Hearsay is considered an out-of-court statement. This is because the witness providing hearsay evidence is repeating what he or she heard or read, and did not witness the events in question directly. For example, a witness may testify that he heard that a business owner was selling counterfeit goods. The individual who made the claim that the witness refers to is not the one providing testimony in court. The witness providing hearsay has sworn to tell the truth, but the individual whose statements the witness is basing his or her testimony on has not been sworn in. For this reason, judges generally prohibit hearsay in court.

Credibility of Hearsay

The credibility of hearsay evidence is dependent on how trustworthy the original source of the information is. Since the witness is repeating what he or she was told by another party, the witness’ credibility has reduced significance. Attorneys will seek to discredit the original source of the information, as well as the credibility of the witness.

While hearsay is generally prohibited from being allowed in court, judges may make exceptions to this rule. Examples of exceptions include when the person who made the declaration is unavailable to appear in court (declarant unavailable), or if making the statement would otherwise go against the interests of the declarant (statement of interest). An example of a statement of interest is an accountant telling a friend that he thinks his boss is skimming money from the company.

Hearsay evidence can make convictions in insider trading and other white collar crime cases difficult to obtain. Stock transaction records and bank statements are generally considered substantive types of evidence, but witness testimony concerning verbal communications that the defendant may have had with other parties may become unusable under intense scrutiny. In some cases, little hard evidence is available to the prosecution, but recorded conversations from wiretaps may serve as the best evidence that the prosecution has. This situation may arise when someone passes insider information to a friend without the expectation of payment, as passing this information along won’t be reflected in any of his or her financial records.

For example, in United States v. Sean Stewart, the defendant was convicted of providing inside information to his father. The prosecution’s case relied on a recording of a discussion the defendant’s father had with a friend, which would generally be considered hearsay unless the father were to testify in court that he made that statement. The judge, however, considered the father’s statement to fall under the statement of interest exception to hearsay evidence.

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